Light It Up

So much light, so few panels. Why isn't there more solar power in sun-drenched Los Angeles? The technology is there, but the will is not. But that's changing fast.

Illustration by Ben Gibson/Pop Chart Lab. See below for explanation.

"I Love L.A.," the 1983 Randy Newman tune that's the City of Angels' unofficial theme song, isn't an ode to overcast skies. If you love Los Angeles, chances are it has something to do with sunshine. Lots of it.

But for J.R. DeShazo, all that sun, along with the city's architecture — vast expanses of low-rise urban developments, with rooftops ideally suited to host panels that harness the sun's power to generate clean, renewable energy — represents something else: a golden opportunity that we've been slow to seize.

In fact, Los Angeles didn't even make the list of the U.S. Department of Energy's 25 "Solar America Cities," what the DOE describes as "forward-thinking cities and counties using innovative approaches to remove market barriers to solar and encourage adoption of solar energy technologies at the local level."

San Diego's on the list. So is San Francisco. Even relatively unsunny municipalities like Seattle, Milwaukee and New York made the DOE's solar cut.

But not L.A.

Still, DeShazo, an environmental economist who heads UCLA's Luskin Center for Innovation within the School of Public Affairs, sees in L.A.'s ample solar capacity an economic engine — from the work created by installing rooftop solar systems and through the development of solar and other renewable technologies that could be sold to a waiting world.

Shedding Light on the Subject

DeShazo recently headed a team of Luskin Center researchers that published the Los Angeles Solar Atlas, presenting through a series of detailed maps L.A.'s rooftop-solar potential. The analysis concluded that the city has 5.5 gigawatts in physical rooftop solar capacity, enough to offset the annual energy needs of half a million typical Los Angeles households. While not all of that physical rooftop capacity is economically viable, the UCLA team estimated that 15–25 percent of it is. "It's conceivable that we could move toward getting as much as 20 percent of our power from solar energy over the next 10–20 years," says DeShazo. "This is a robust resource."

And largely untapped. Los Angeles ranks last among the state's major utilities in solar capacity per capita. Although California is considered a leader in solar development, the Los Angeles Department of Water and Power (LADWP), the nation's largest municipal utility, still gets approximately 45 percent of its energy from coal.

Why has a city endowed with such abundant solar potential failed to move more quickly in that direction? For years, there was a simple answer: Solar was expensive. But recently that's changed in a big way, driven by major investments in solar-panel manufacturing in Asia as well as by federal and state incentives that subsidize solar installation and construction locally.

"We've been climbing the mountain toward the sun in terms of energy costs," says DeShazo. "The cost of conventional fuel sources is rising over time, and the cost of renewable energy is falling." When those cost curves reach their inevitable crossing point, we will have reached what's known as grid parity — solar energy becoming no more expensive than energy produced from a coal-burning plant or other nonrenewable source.

With cost receding as a prohibiting factor, DeShazo believes capitalizing on this opportunity comes down to political will — embracing policies that would increase rates in the short term and change the way utilities do business, with the potential for major environmental and economic payoffs over the longer term. And, if the city is moving more slowly than he and other green-tech advocates would like, there are encouraging signs that L.A. is reaching for the sun, with UCLA playing a central role.

Solar 101

No one doubts the importance of weaning off our reliance on fossil fuels such as coal for energy; the question has been what to replace them with. Among renewable sources, wind and small-scale hydropower have led the way because they are cheap. But hydropower doesn't offer the same potential for producing large amounts of clean, renewable energy as solar. And wind, which tends to be strongest at night when electricity demand is low, is turned into energy outside of L.A., which means none of the local economies benefit.

One of solar's limitations is that it's an intermittent resource — available only when the sun is shining. Thus, until the sun's energy can be stored and delivered on demand, natural gas, which can be dispatched at any time, will continue to be part of the system. But unlike wind, solar produces its most power at times of peak demand — during the day and in the summer.

Solar developments fall into two categories. Large, utility-scale projects produce solar power by the hundreds of megawatts. Utility-scale solar is more cost-effective than rooftop; the downside is that the land needed and potential disruption to the local environment tend to dictate that it be sited in remote areas, requiring high-voltage transmission to import the power into the city.

Nonetheless, these projects are a key component to a city's renewable energy plans. "The development cycle can take years, but we're starting to see a number of major utility-scale projects that were funded several years ago entering construction," says Stephen Mullennix M.B.A. '01, managing director of Santa Monica-based U.S. Renewables Group, which invests private equity in utility-scale, renewable energy projects.

Then there's rooftop solar — or, specifically, systems that support the city's power grid through a photovoltaic (PV) system installed on the roof of a residential, commercial or industrial structure. In Los Angeles, with its proliferation of solar-friendly rooftops in areas like the San Fernando Valley and Inland Empire that receive sunlight for at least 10 hours a day, that's where considerable opportunity lies.

The technology is already there. "These systems have been in use for 20-30 years," notes Mullennix. "Their life cycle and capabilities are well understood, and as the prices have come down, it's become clear that this can be an important form of energy production."

One reason Los Angeles has been slower than many cities in moving toward solar is the relatively low prices charged by LADWP. "The strongest incentive for any kind of new energy technology is the high price of a competing fuel source," says Alex Fay '07, who was director of clean technology for the Los Angeles Mayor's Office of Economic and Business
Policy from 2009-2011 and is now business development manager at Sylmar, CA-based Quallion, a manufacturer of lightweight, lithium-ion batteries that can be used for renewable energy storage. "If you're a homeowner, as long as you are getting cheap electricity from the grid, your solar panels have a much higher bar to reach before they can be cost-effective."

Those economics will change, Fay says, as LADWP is mandated to move away from the use of coal (the dirtiest, but cheapest, energy source), raising electricity rates and making solar a more attractive trade-off. Still, there are other constraints. In most cities, homeowners and businesses lease their rooftops and purchase the power from third-party developers at an agreed-upon long-term price, saving themselves the up-front cost of purchasing a system, which can run in the tens of thousands of dollars. That model hasn't been pursued in Los Angeles, where the DWP has had a monopoly that prohibits third parties from selling electricity.

"Accommodating more rooftop solar means that utilities, which are used to centralized power generation and distribution, have to adapt to programs that procure power from small-scale generators," says DeShazo. "It requires new management strategies, including the capacity to model and understand the weather effects on rooftops, and to plan around the intermittent supply."

The City-Campus Solution

In California, the move to solar isn't a matter of choice. In September 2010, the California Air Resources Board approved an executive order signed by then-Gov. Arnold Schwarzenegger, raising the state's renewable portfolio standard to 33 percent by 2020. Unlike the previous 20-percent mandate, the new standard applies to public utilities, requiring LADWP to produce one-third of its energy from renewables by decade's end. In 2008, Los Angeles Mayor Antonio Villaraigosa '77 announced a long-range plan to produce 1.2 gigawatts of solar power by 2020, enough to meet one-tenth of the city's energy needs.

To get there, the city is partnering with UCLA in two major ways.

In 2009, the Los Angeles Business Council commissioned a Luskin Center team headed by DeShazo and Ryan Matulka M.B.A. '09, M.A. '09 to study the feasibility of an incentive plan for promoting distributed solar energy. The result of that research was two 2010 reports outlining the positive impact of a 600-megawatt solar feed-in tariff program.

The feed-in tariff has been used to ignite rooftop solar development in Germany and other parts of Europe, as well as in many U.S. cities. The goal of such a program is to remove the uncertainty from solar investment by allowing the small-scale producer to enter into a long-term contract to sell power to the utility, which then resells it to customers through the grid. The agreed-upon rate ensures both recovery of the investment and a modest profit over the life of the system.
DeShazo was originally skeptical that it would be possible to design a feed-in tariff program that would be economically appealing for ratepayers. But his group found that, given the ample supply of large, flat rooftops in sunny locations and the falling cost of solar panels and installation, a 600-megawatt program targeted at large-scale commercial/industrial projects would cost no more than generating the same power from natural gas, as long as it was phased in over 10 years to enable ratepayers to take advantage of the declining cost of the technology.

"We're close enough to grid parity that you can design a feed-in tariff in which the subsidies for the first few years are more than offset by the cost savings over the last half of the program," explains DeShazo, whose report estimated that such a program would generate more than 11,000 jobs for the city, along with millions of dollars in tax revenue from clean-tech companies.

Since completing the study, the Luskin Center group has worked closely with the Los Angeles City Council, the Office of the Mayor and DWP to help inform the decision-making process. Based on the report's findings, the city is now proceeding with a five-year, 75-megawatt demonstration program first proposed by Councilwoman Jan Perry — a small, but important, step.

"Whatever the city ends up adopting as a policy is going to look a lot like the recommendations that came out of the Luskin Center report," predicts Fay.

While the city has yet to go all-in on the program DeShazo's group designed, it has joined forces with UCLA and other academic and business partners on Clean Tech Los Angeles (CTLA), an effort to establish Los Angeles as a global leader in research, commercialization and deployment of green technologies. In October, CTLA launched the Los Angeles Cleantech Incubator, funded by the city's Community Redevelopment Agency and LADWP, to accelerate the development of clean-tech start-up companies.

"We see this as becoming an economic engine for the city," says Michael Swords, executive director of strategic research and global partnerships at UCLA and chairman of the CTLA board. "We want to develop technology in our laboratories that will lead to new clean-tech companies, creating jobs not only for Los Angeles in general, but for our students."

A glimpse of the potential for UCLA to contribute to an economic boom through the development of new solar technologies can be found in the laboratories of researchers such as Yang Yang, professor at the UCLA Henry Samueli School of Engineering and Applied Science. Yang has developed an alternative to traditional polycrystalline silicon solar cells that uses plastic, which is far less expensive. The research is in the process of being commercialized.

UCLA's contribution to solar-industry growth in Los Angeles also extends to alumni such as Mullennix who are funding solar companies, as well as to many others who are involved on the business end of the companies that are receiving funding. Mullennix's firm is the largest investor in Santa Monica-based SolarReserve, which is building a utility-scale facility in Tonopah, Nev., that will use a field of 17,500 swiveling mirrors to focus the sun's heat onto a receiver atop a tall tower. Inside, heat from molten salt boils water for steam, which is turned into electricity. The approach is designed to enable solar power to be stored and used on demand.

"Our plant in Nevada will be a great demonstration of the ability to store and reliably generate energy, even when there is no sunlight," says Andrew Wang M.B.A. '01, SolarReserve's director of development.
UCLA students are also doing their part. This year, the first solar panel will be installed on the roof of Ackerman Student Union, funded by ASUCLA's The Green Initiative Fund. The university currently has solar water heating in a number of the residence halls.

"It's exciting to see so many UCLA students and alumni who are interested in careers in sustainability," says Nurit Katz M.P.P. '08, M.B.A. '08, UCLA's sustainability coordinator.

As for the future of solar in Los Angeles, the Luskin Center researchers whose reports have been so influential in shaping the discussion are cautiously optimistic.

"What's most important is that we not miss this opportunity," says Matulka, now an associate at Seal Beach, CA-based Amonix Inc., which designs and manufactures concentrated PV commercial solar-power systems. "This is low-hanging fruit for Los Angeles. We have the resources. We have the workforce. We just need the political will to implement strategies that will bring great environmental and economic benefits."

Illustration explanation: To get an accurate fix on how L.A.'s solar efficiency rates compared to other major cities, we took each municipality's installed solar capacity and divided it by the number of sunny days per year. The result: a solar efficiency "index" that shows the City of Angels trails other cities — but has plenty of room for sun-powered growth.